The French general sales and service agent European Cargo Services (ECS) has acquired a majority stake in Southeast Asia’s AVS GSA Group for an undisclosed amount, thus strengthening its position in that regional market. In a joint statement, the partners speak of common interests and their ambitions to knit the world-spanning network of ECS even tighter.
AVS GSA is the latest name standing on the long acquisition list of Paris-based European Cargo Services in its stride to take the pole position in the race to become the world’s leading cargo sales agent. The integration of the Southeast Asian firm is a decisive step in ECS’s long-term strategy to penetrate growth markets even further. Mandate airlines benefit particularly in two ways: they not only get services based on equal standards but can gain additional revenues by capitalizing on shipments shifted on behalf of ECS from one of their client carriers to another when transferred at mutually served hubs.
Renowned mandate airlines
AVS GSA, founded in 2007 as Aviation Solutions Services GSA and rebranded shortly after, turned over €32m in 2015. This year “we expect to grow by 20 percent,” forecasts Thomas Ong, Singapore-based Group CEO of AVS GSA. Including India, roughly 100 staff are working for the company.
Main client is DHL Aviation under whose umbrella commercial cargo flights of capacity providers like AeroLogic, Kalitta and other companies operating on behalf of DHL to and from Southeast Asia are managed. Further well-known customers standing on the agent’s list are Swiss World Cargo, Oman Air, Air Asia, Raya Airways and a number of local actors.
First contacts between ECS and AVS GSA were established about two years ago, followed by intense negotiations that ended with the signing of the takeover on 21. June. Despite the upcoming integration of the Southeast Asian agent in ECS’s network, AVS GSA will keep its brand both parties assure.
Perfect fit, claims Thominet
According to the treaty, ECS acquires a 70 percent stake in AVS GSA putting the French investor in command, with former proprietors Thomas Ong from Singapore and his Bangkok-based partner Monchai Jirakiertivadhana holding the remaining share.
The going together fits both sides perfectly, states Adrien Thominet, ECS Group’s COO. AVS GSA runs offices in nine Southeast Asian countries and India, thus widening the reach of ECS particularly in emerging economies and their fast growing air freight markets.
“ECS intends to further penetrate Asia, particularly the southeastern part, whereas our prime goal is to go global which we were not able to finance with our own resources,” stresses AVS GSA chief Ong. “We can only realize this target with a strong partner at our side because it would exceed our own financial capacity by far.”
Manager Ong went on to say: “ECS were underrepresented in this part of the world, running offices only in Singapore and Vietnam, whereas we manage a network of stations spanning throughout Southeast Asia, including India.”
“AVS GSA Group perfectly complements the network of ECS Group. Both Groups represents DHL Aviation in each of our own territories. We also share other principals like Oman Air, Malaysian Airlines, etc. ECS Group has a strong reputation and global leadership position in the air freight industry and we are proud to be part the team,” he exclaims.
It can be expected that his company is not the last candidate ECS will look at to further grow the agent’s global network.
“Uberization” picks up speed
In the meantime, ECS has announced winning calls for tenders in Germany with DHL and Malaysian Airlines, both which commenced already on 1 July. DHL and Malaysian Airlines also belong to the portfolio of AVS GSA in East Asia thus complementing and fitting the network.
By rounding things up COO Thominet expresses great hopes that his company will further expand in the Far East. “The Asian market is different to Europe, as if you work with one carrier it attracts its competitors.” Falling rates and rising costs which airlines are increasingly facing foster their willingness to outsource the air freight business. This trend to ‘uberizing’ their cargo activities, as ECS manager Thominet calls the trend, plays into the hands of globally acting GSAs like European Cargo Services, he believes.